Lawmakers Seek 'Clunker' Vouchers for Out-of-Stock Cars

By

Josh Mitchell

Updated Aug. 12, 2009 12:01 a.m. ET

WASHINGTON -- The Obama administration is reviewing a congressional request to allow consumers to use "cash for clunkers" vouchers toward future vehicle purchases as a way to cope with dwindling supplies of many popular, fuel-efficient clunker replacements.

Customers trading in older cars under the program are getting vouchers worth $3,500 or $4,500, depending on the fuel-economy standards of the trade-in, to buy a new car. But if a buyer wants a particular model or color that isn't in stock, the voucher can't be used.

Under the change requested by Reps. Candice Miller and Fred Upton, Michigan Republicans, the voucher could be redeemed even if the dealer has to order the new car from the manufacturer. In that case, the trade-in transaction wouldn't be completed until the new car arrives.

The lawmakers requested the change amid concern that lean stocks of cars and trucks could slow sales and damp the program's impact.

The Department of Transportation is reviewing the proposal, an administration official said Tuesday. The official declined to comment further.

Junk cars after being compressed at Culpeper Salvage yard in Culpeper, Va., on Tuesday. The salvage yard has just started receiving vehicles from auto dealers under the U.S. government's 'cash for clunkers' program.
United Press International

The requested change comes as dealers intensify pressure on auto makers to ramp up production to respond to higher-than-expected consumer demand in the program.

"The inventories of some auto makers and dealers have been so depleted that the program's extension may be limited in its effectiveness," the lawmakers said in a letter to Transportation Secretary Ray LaHood.

So far, most major U.S. auto makers have proposed relatively modest production increases following the jump in demand. Auto makers are wary of ordering significant additional production because after the latest $2 billion in federal clunkers money is gone, the market could cool down.

Still, some vehicles popular with consumers using the clunkers program are in tight supply. Ford Motor Co.F-1.79% dealers had just 21 days' worth of the Ford Escape compact crossover utility vehicle on hand as of July 31 -- about one-third the level industry executives used to consider ideal.

Allowing vouchers to be reserved for new orders of vehicles "will allow consumers to purchase the vehicle they want, even if it is not present on the dealer's lot," the letter states.

Through early Tuesday, dealers had requested reimbursement for 292,447 vouchers issued under the clunkers program totaling about $1.23 billion.

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